A recent Washington Post report bore the headline "Mighty Rivers Run Dry, Hobbling China's Economy." The piece went on at length about China's current water shortage and all its consequences, including tales of cities in which water is on only two hours a day, long lines at water distribution points, lost crops, and decreased industrial production.
After 22 column inches of such tales, the Post vouched a possible explanation for the chronic shortages: Until recently, water was free, and even now farmers, who are the biggest users, pay only one-tenth of its cost.
Chinese officials agree that water prices should rise, but no specific plans for this appear to be imminent. Instead, the government is planning vast hydro projects to carve tunnels through mountains, to expend huge amounts of energy pumping water uphill thousands of feet, to build monumental dams, and to displace massive numbers of residents. Its partner–co-conspirator may be a more appropriate term –in all this is the World Bank.
Anyone familiar with the history of the great dam building binge in the American West during the earlier part of this century (See "Dam Fools," April 1998) will be overcome with déjà vu. In China today, as in the United States then, the operating principle seems to be that no effort is excessive as long as the government can sever consideration of a project from the discipline of honest market prices.
Another constant seems to be the dominance of the engineering mentality. The American effort was run by the technocrats of the Army Corps of Engineers and the Bureau of Reclamation, who love water projects for the intellectual challenges they pose and the massive beauty of the final product. Chinese engineers seem the same; building 1,500-foot dams and $6.6 billion conduits is lots of fun.
In the United States, sober analysis shows that rather minor increases in prices do wonders to shift water from low-value to high-value uses–and to eliminate the need for billions of dollars in water projects. It seems likely that China, too, would benefit from thinking small–and from introducing some real market discipline.